COMMENT ON ELECTRICITY INCREASES

Eskom is planning to recover losses from corruption and loopholes in the MYPD rules by increasing your tariffs by an estimated 30% before the end of 2018.Nersa has invited the public to comment on Eskom’s request to increase tariffs to recover R66bn lost between 2014 and 2017 – the years included in the Public Protector’s “State of Capture Report”. Please use the form below to add your name and comment.

Dear SA has partnered with the Energy Expert Coalition (eeco) with Ted Blom to help the public have a say. Should you be at a loss for words, read the summary, live input or documents below the form. Feel free to copy and paste into the message area provided.

SUMMARY

Nersa is currently considering Eskom’s RCA (Regulatory Clearing Account) application for a refund going back to 2014-2017.

The total of Eskom’s claim amounts to some R66bn over the period.

Translated into tariff increases, this will amount to around 30% increase in the current tariff.

The secondary problem with these RCA claims, is that they become “embedded” in the tariff structure, and even after the R66bn is recovered, the tariff never reverts to the old level.

This MYPD methodology is thus defective as it never ceases the recovery, and secondly, encourages Eskom to build wild and untested assumptions into its tariff applications.

The defective MYPD rules also encourage Eskom to overspend – as it simply recovers such overspending from the public, also via the RCA provisions.

Besides they rules relating to Eskom’s tariffs being suspect and undefinable, the management of these rules between Eskom and Nersa is another issue of contention insofar as they do NOT inform the public timeously (before the relevant year end) that they are heading for losses which the public will end up funding at some later stage.

The further issue with the RCA’s over this particular years, is that they relate to the peak stealing years as included by the Public protector “State Capture Report”.

Whilst a preliminary audit might find that the amounts claimed are categorised under claimable headings, nobody has run an independent audit over Eskom’s numbers to isolate the impact and quantum of thieving.

If the above is true, the public are being asked to refund Eskom’s costs attributable to thieving by the “Zuptas”

If the above holds true, then it confirms that NERSA has NOT been conducting its oversight and Regulatory duties diligently.

If NERSA approves Eskom’s RCA for 20114/15, 2015/16 and 2016/17, amounting to some R66bn, it will result in an electricity tariff hike of some 30% and that will in turn result in further Enterprise closures, bankruptcies and job losses.

In addition Eskom still has to apply for MYPD4 which should extend to 2024.

Ideally, the new IRP/IEP should also be published by end 2018, to detail SA’s future energy requirements to 2040.

According to our initial estimates, Eskom will apply as follows:

MYPD4 due before end 2018

Period

Est increase

Domestic

Mega Flex

Correct *

c/kwh

c/kwh

c/kwh

Current

217

355

40

RCA

30%

282

462

42

2019

/

2020

20%

339

554

44

2020

/

2021

50%

508

831

46

2021

/

2022

30%

660

1080

48

2022

/

2023

30%

858

1404

50

2023

/

2024

30%

1116

1825

52

* Base year2006 plus Electricity inflation corrected

Thus the public will just continue funding the Eskom gravy train and the effects will compound over time.

Eventually this will become reflected in the exchange rate as the excessive electricity costs make SA increasingly uncompetitive until exports cease.